The future of the hospital is the network

From patient to consumer, from acute care to population health, from fee-for-service to fee-for-value — the past decade has flipped healthcare on its head. So what’s next? Flipping hospitals on their heads to ensure they stay alive. Illustrative of such change is data from the MedPAC analysis, which showed inpatient volume was down by six percent from 2010 to 2013, while outpatient services have been steadily on the rise (30 percent) for the past 13 years. In Illinois for instance, a huge percentage of the state’s 32,000+ hospital beds routinely go empty — with an occupancy rate of less than 60%.

This doesn’t imply that fewer patients need care — instead, it’s evidence that these patients are going elsewhere. While this is a threat for the hospital of yesterday, it’s an opportunity for the hospital of the future. The vast majority of hospitals need to redefine themselves from organizations that deliver care to organizations that orchestrate care. Even though hospitals are one of the core lines of lifeblood in healthcare, the way in which the majority of them operate aren’t appealing to patients today, nor is it sustainable to hospitals’ future existence.

Don’t misunderstand — hospitals are the places where we see medical breakthroughs; where we find we are stronger, braver and more powerful than we think. In short, they are the places where humanity often shines at its brightest. However, our system is so broken that it’s turned this instrument of health and humanity into a walled citadel. To better serve the patients who are seemingly already going elsewhere, hospitals need to become a leading orchestrator of the very best care on behalf of patients.

The folks at New York-based Mount Sinai seem to get it. Last year, readers of The New York Times were treated to a Mount Sinai marketing campaign headline that read, “If our beds are filled, it means we’ve failed.” It’s counterintuitive, but spot on. Mount Sinai has embraced the idea that “instead of receiving care that’s isolated and intermittent, patients [should] receive care that’s continuous and coordinated, much of it outside of the traditional hospital setting.” It’s only with this shift away from a “filling beds” mindset, combined with a refactoring to the way in which a hospital interacts with other players in the market, that hospitals will maintain a leading role across the care continuum.

We must collectively accept and internalize these truths — and it’s time for hospitals to fully embrace a new set of core competencies.

First is the requirement to leverage an infrastructure of cross-continuum connectedness and total cost and quality transparency. Software alone won’t get hospitals there; being part of a more connected national network is critical.

Second, hospitals need to embrace savvier consumer marketing that helps them stand out amidst emerging players in healthcare — like CVS Health and Walgreens — who understand the consumer mindset and have built their brands around convenience and ease.

Third, a new era of hospital sales must emerge, working with insurers and employers to broker deals that send the right patients through your doors only for the services you do really well.

Fourth, the successful hospitals will create a renaissance of accessibility: If you can’t provide an appointment slot served up via a mobile app for every procedure type within three days, you’re failing.

And fifth, hospitals should become ecosystem partners, not brick-and-mortar investors. This means eliminating anything that can be done in a primary care practice, a retail clinic, or at home, and exporting non-invasive surgery out of the hospital to more cost-effective specialized surgical centers.

To profit and thrive in this new model, hospitals must embrace value-based-reimbursement contracts for such procedures. This benefits the entire healthcare system, too — if half of the eligible surgical procedures moved from the hospital to ambulatory surgery centers, Medicare would save an additional $2.5 billion a year or $25 billion over the next 10 years.

As National Coordinator for Health IT and HHS' Acting Assistant Secretary for Health Karen DeSalvo, MD, recently reinforced in a conversation with the Wall Street Journal, patients are becoming the undisputed center of care. And as a result, the information model for healthcare is changing to meet this shift. The Office of the National Coordinator for Health Information Technology is turning its focus away from EHRs to the patient, enabling a patient’s data to finally be standardized, aggregated and moved when and where it matters for the patient.

This is creating a rapidly accelerating healthcare network, and the pressure is on hospitals to tap into it and not be left out. Patients, pharmacies, imaging centers and urgent care providers are embracing it — from helping patients connect with pharmacies that offer immunizations close to home, to offering smartphone apps that can be used remotely to check vital signs, to doing business with imaging centers that can more cheaply execute and share radiologic images.

In short, the network effect has finally arrived in healthcare; the question is how long it will take to arrive in hospitals. The hospital walls are indeed shrinking, but the hospital that embraces a culture of resource orchestration in lieu of resource control will be the hospital that sees the benefits of those shrinking roles — and the rewards of a growing network.

This is the hospital of the future that will help to unbreak healthcare.

Jonathan Bush is CEO and co-founder of athenahealth and author of "Where Does it Hurt?: A n Entrepreneur's Guide to Fixing Health Care."

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